Tuesday, 19 November 2013

Asia Stocks Rise as Bernanke Says U.S. Rates to Stay Low

By Adam Haigh - Nov 19, 2013 4:05 PM PT

Asian stocks rose after Federal Reserve Chairman Ben S. Bernanke said low interest rates will continue in the U.S. long after the central bank ends its program of bond buying.
The MSCI Asia Pacific Index gained 0.2 percent to 143.06 as of 9:01 a.m. in Tokyo, on course for the highest closing level in three weeks. The gauge has risen this week after China pledged to execute economic reforms and Janet Yellen, the nominee to replace Bernanke, said she would continue U.S. stimulus. Retail sales in the U.S. probably returned to growth last month, according to a Bloomberg survey of economists before data due today.
Bernanke, whose term as Fed chairman expires Jan. 31, said the U.S. labor market has shown “meaningful improvement” since the start of the central bank’s bond-buying program and that the benchmark interest rate will probably stay low long after the purchases end.
“He’s just confirmed that the quantitative easing measures will continue, certainly for the near-term future,” Kirk Hartman, Los Angeles-based chief investment officer at Wells Capital Management, where he helps oversee about $331 billion, told Bloomberg TV. “We all know that the end of the Fed tapering is coming, the question is when. The market is hopeful.”
Japan’s Topix index added 0.4 percent, Australia’s S&P/ASX 200 Index sank 0.3 percent and South Korea’s Kospi index slipped 0.2 percent. New Zealand’s NZX 50 Index fell 0.5 percent. Markets in China and Hong Kong are yet to open.

Hong Kong

Hong Kong’s Hang Seng China Enterprises Index (HSCEI) of mainland Chinese shares listed in the city yesterday climbed to the highest level since March, completing a four-day rally. Futures on the gauge advanced 0.3 percent in the most recent trading sessions and contracts on theHang Seng Index added 0.2 percent.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York snapped a four-day advance, retreating 0.3 percent in the U.S. yesterday.
China’s policy makers unveiled the biggest package of economic reforms since the 1990s last week, with leaders in the world’s second-largest economy pledging to allow more private investment in state-run industries, ease the one-child policy and expand farmers’ land rights.
Futures on the Standard & Poor’s 500 Index rose 0.2 percent today. The gauge yesterday dropped 0.2 percent, a second day of declines, as investors weighed rising valuations and disappointing earnings forecasts.

U.S. Rates

“The target for the federal funds rate is likely to remain near zero for a considerable time after the asset purchases end, perhaps well after” the jobless rate falls below the Fed’s 6.5 percent threshold, Bernanke said in remarks prepared for a speech to economists in Washington. A “preponderance of data” would be needed to begin removing accommodation, he said.
Bernanke spoke in Washington after Fed Bank of New York President William Dudley said earlier this week that while he’s “more hopeful” the U.S. economy is strengthening, it’s not enough to warrant stimulus cuts yet.
The Asia-Pacific gauge traded at 13.9 times estimated earnings yesterday, compared with 16.2 for the S&P 500 and 15.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net